How to win PLM SaaS race

Once upon a time companies didn’t use SaaS (cloud) software. I remember first time I said “cloud” world more than a decade ago during one of the meetings. It sounded completely crazy and nobody really understood what does it mean. And then changes started to happen. Gradually and then suddenly, companies realized the power of cloud computing, elasticity and new ways of delivery software. Actually, the best way to call it was to call it “No software”. This is how Salesforce.com called it back in 1999.

PLM vendors were late to discover cloud technologies and to bring cloud to manufacturing companies. Even pioneers such BOM.COM introduced it almost at the same time as Salesforce, the adoption was very limited. PLM products were available for hosting and in many situation, cloud was considered as an option to have PLM server in a different place. The first large PLM company to try hosted (cloud) PLM was actually PTC via IBM PLM OnDemand project (2006). You can hear various opinions about that project, but it was a failure, in my view. It was no market to sell hosted PLM and I think project was sold to a very small number of customers. The next big move was done by Autodesk PLM360. Carl Bass, Autodesk CEO was huge believer in elastic computing and delivery of PLM in a different way.

I’ve been buzzing, blogging and sharing my thoughts about PLM cloud for the last few years. The following diagram is the best way to summarize evolution of PLM from local servers, to cloud hosting and into multi-tenant PLM SaaS applications.

In my view, Autodesk PLM360 initiative became an industry trigger. Timing for Autodesk cloud PLM intervention was chosen in the right way. The jury is still out to see if Autodesk actually realized the opportunity of first mover in cloud PLM. However, just few years later, “cloud PLM” became available from all PLM vendors. But here is the thing… It didn’t change much. And in my view, there 2 main reasons for that – manufacturing status quo and existing PLM paradigm.

Manufacturing programs are long. Manufacturing companies made significant investment into existing CAD and PLM software. Changes are hard and ROI are questionable. We’ve heard all these things many time. But the change will be made. And to make the change “cloud” technology won’t be enough. Here are few things, I believe, can serve as a guidance for coming PLM SaaS race:

1- Where is the shift?

Unless you’re looking for a “hole” in a market, which is almost not the case for PLM, you must watch where shift is happening. You can say “cloud” was a shift, but I think, it was not enough to compete with existing CAD and PLM dominant positions. You should be looking for what is shifting the world of manufacturing. And if you think about it, you can see that globalization and specialization are two main factors leading changes for large and small manufacturing companies. Better, faster, cheaper are still the name of the game, but the landscape is global and much more complex.

2- How user behavior is changing

User behavior change is another important element of entering crowded market. And one of the key trends these days is shift in communication. No phone calls. No fax machines. Speed, speed, speed. An ability to communicate differently is one of the most fundamental changes in use behavior. Messaging, online apps, bots, etc. All these elements to be considered to win future PLM paradigm race.

3- Business and economical models

The last, but not least is shift in economics and business models. Subscription is the most obvious thing that changed in business models. However, the biggest shift is actually digital unbundling of tools that before were presented as suites and packages. We are going to see more granular consumption of services and potentially new business relationships enabled by online digital economies.

What is my conclusion? It is thrilling time to be in engineering and manufacturing software these days. Digital transformation is happening, but most of manufacturing companies are still dinosaurs from the standpoint of tools they are using. Timing is one of the most important element of success and it looks like companies innovating today got the right time. Next few years will be very interesting to watch in PLM business. Just my thoughts…

I have worked on the Companies like GE and Boeing where when I tried to propose the solution of software as a service …they are most worried about hosting their data or solution in their cloud servers….how big companies like the above example can overcome this issue …pls share your thoughts

Lou

Cost considerations will eventually sell SaaS. Especially up front cost avoidance (software and hardware capital, consulting, etc.). Competitive pressure for cloud PLM has been lacking. Most of the traditional PLM companies have only one toe in the SaaS water. But now with committed cloud tools like Arena and Propel confirmed as industrial grade for small and medium businesses , competition is coming for large as well.

beyondplm

Vasanth, I can see your point. I think GE and Boeing are only coming to discover cloud solutions for engineering and manufacturing. Cloud is on the top list for CIOs for 2018 and I’m sure it will have an impact on GE, Boeing and others. – https://www.idc.com/getdoc.jsp?containerId=prUS43188317

beyondplm

What cost saving can Arena and Propel provide? Both advertise per month / per seat model, which is very expensive when it comes to enterprise sales and almost never used. I don’t have information about Arena infrastructure used today, but some of Arena solutions are 20 years old. Propel has a great idea to use SFDC to sell enterprise PLM. In my view, jury is still out to watch engineering and manufacturing organization adoption PLM based on SFDC. The presence of these two companies in enterprise PLM business is very small, they don’t have engineering integrations and I cannot see how they can challenge traditional players with resources and large install base in PLM cloud race. You didn’t mention PTC, which is aggressively selling Windchill as “cloud PLM” hosted by IaaS.

Lou

Per seat pricing is just list pricing for simplicity and transparency, geared towards typical customers. Pricing for large accounts will of course be restructured/negotiated, just like any other deal. If a company like Ford knocks on your door and says they want to standardize on OpenBOM, you would not wind up charging them list price.
Start up costs are the most glaring. Rolling out an old PLM tool is a nightmare. Even small configuration changes require major effort and expertise. A tool like Windchill requires a lot more expertise to roll out than newer cloud tools. No comparison. Plus the big PLM vendors all have huge overhead, bloated reseller networks, etc. That means higher costs.

beyondplm

Now I’m confused. So, Arena and Propel online cost doesn’t mean anything and discount and deal making is used as it was before in large PLM deals with 90% discount provided on Friday afternoon?

What cost saving Arena and Propel are providing? is it all about startup cost?

An interesting post was published by Luna-Tech research about the Business Process Management redefinition. Only few years ago, PLM was very focused about Collaborative Business Processes. These days I see PLM and Business Processes are not going very often together. My take is that PLM learned BPM implementation lessons. It…

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